Shutdown threat over North Sea tax

British Gas owner says it may stop flow from Britain's biggest gas field in response to Osborne’s surprise budget raid on North Sea firms

The Rough facility off the Humberside coast in the North Sea is owned by Centrica (Paul Rogers)

The owner of British Gas is considering shutting down Britain’s biggest gas field because of George Osborne’s surprise tax raid on North Sea firms.

Centrica today stopped production at Morecambe Bay, a reservoir 25 miles west of Blackpool that provides 6% of Britain’s gas, for maintenance work. The company said it may not reopen the field following the chancellor’s 12% tax increase on North Sea profits.

The move marks the biggest escalation in a bitter dispute between the industry and the Treasury.

Big firms, including Royal Dutch Shell, Chevron and Centrica, have said the tax change, the third in the past decade, makes Britain one of the least stable financial regimes in the world for oil and gas producers, and would hasten the decline in North Sea production as marginal fields are rendered uneconomic.

Centrica said: “Following the [tax] increase in the budget, UK fields are subject to some of